Stop Apologizing for the Stimulus

[ProSense]

Stop Apologizing for the Stimulus

The president needs to make the case for his economic policies, not hide from them.

By Eliot Spitzer

<...>

It's alarming that once again we are letting the Republican candidates' rhetoric and near-hysterical fear of government spending distort the national debate and keep us from the more dramatic economic changes we still need.

The lessons of the Great Recession and the semi-recovery are clear:

1. Keynes was, and is, right. Though much-maligned by Greenspan neo-libertarians, government spending in the absence of private sector demand can resuscitate an economy. The stimulus bill worked. It saved millions of jobs, generated demand when there was none, and kept the economy from near total collapse. The unemployment rate kept going up, but it would have been so much worse without it. Take a look at the data. There is no doubt that the jobs picture stabilized and then improved after the stimulus kicked in.
   
   
2. Targeted government intervention works. Carefully calibrated government intervention in individual sectors can return those sectors to solvency and also force needed reform when done properly. The auto bailouts are a case study in wise use of capital both to overcome a short-term cash flow crisis and to impose necessary structural changes. The bank bailout was only a partial success, because although the sector was returned to solvency, the needed reforms were not imposed. Hence the social gains have been much more limited. But both sectors prove that government can play a hugely important and positive role as a lender of last resort.
   
   
3. An individual health insurance mandate works. <...>
   
   
4. Making the Bush tax cuts permanent has not created jobs. <...>
   
   
5. The housing crisis still needs to be addressed head-on. <...>
   
   
6. Joblessness—not the deficit—should be our immediate policy concern. <...>

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[andym]

1. Keynes vs GOP anti-government propaganda is the battleground for the future of the country

If the GOP wins, its the end of any hope for economic liberalism for a generation. Winning means convincing voters of what constitutes economics that works. It isn't difficult to convince Americans of almost anything. For example. 55% of Americans believe that guardian angels really exist : http://www.time.com/time/nation/article/0,8599,1842179,00.html
Knowledge of science and economics lags. See for example, http://www.councilforeconed.org/cel/WhatAmericansKnowAboutEconomics_051105-ExecSummary.pdf for example (although adults got 70% of the questions on a basic economics quiz correct)


Democrats need to discuss the likelihood that Stimulus was not big enough or well enough targeted toward small business and a possible government jobs program, not that it helped cause the deficit (and the so-called big government overspending problem).

By claiming the economic crisis was due to government overspending or corrupt government-based companies like Fannie Mae/Freddie Mac, the GOP sets the stage to privatize Medicare, Social Security and cut the government's size back to 1890-like levels.

That lack of business regulations was and is the problem underlying the recession and not the cure is being obscured by GOP on-message propaganda. Such propaganda is at best only weakly being countered by Democrats.

[ProSense]

2. "Democrats need to discuss the likelihood that Stimulus was not big enough "

You're right, but evidently there is disagreement.